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Main => General Discussion => Topic started by: toast on January 08, 2015, 12:11:08 am

Title: ok which one of you covered their shorts 20 minutes before they expired?
Post by: toast on January 08, 2015, 12:11:08 am
You know there's no penalty for just letting it expire right?
Title: Re: ok which one of you covered their shorts 20 minutes before they expired?
Post by: merlin0113 on January 08, 2015, 12:15:13 am
You know there's no penalty for just letting it expire right?

Please elaborate this!
Title: Re: ok which one of you covered their shorts 20 minutes before they expired?
Post by: lil_jay890 on January 08, 2015, 12:17:29 am
Wow I really thought my short order would get filled when all those guys had to cover...  it was a ton of orders and I'm offering 5% on bitusd.

It actually looks like the short was the same person with several orders out.  He put in a new short at the highest interest rate (6.14) and basically rolled over his short by covering into those orders.
Title: Re: ok which one of you covered their shorts 20 minutes before they expired?
Post by: roadscape on January 08, 2015, 12:22:23 am
Lol.. For some reason I thought that margin calls happen in the 'time' dimension as well :D
Title: Re: ok which one of you covered their shorts 20 minutes before they expired?
Post by: merlin0113 on January 08, 2015, 12:22:36 am
Wow I really thought my short order would get filled when all those guys had to cover...  it was a ton of orders and I'm offering 5% on bitusd.

I was being confident about short successfully by offering 0 interests since one month earlier it did. So bad I missed it.
Title: Re: ok which one of you covered their shorts 20 minutes before they expired?
Post by: arhag on January 08, 2015, 12:46:37 am
You know there's no penalty for just letting it expire right?

Although it is probably safe to assume this shorter didn't know there was no penalty, is there not generally a situation where covering your short right before it expires would be beneficial?

For example, let's say people are selling BitUSD (not short selling) under the price feed. Perhaps you would need to cover at a loss and for that reason you have avoided covering your short in the hope that the price will go up. But there is only 20 minutes left before your short expires so you no longer have any hope of that occurring. Wouldn't you prefer to make several bids for BitUSD at each unique price that it is being offered at, and then use that BitUSD to manually cover your short, rather than letting the market do it for you at the price feed? I guess that depends on how the auto-covering is implemented. Is it a limit order or is it a WYAIWYG order? If it's the latter you will end up paying more BTS of your collateral than necessary in the autocover, where the excess would go towards paying the overlap that gets distributed to BitUSD holders as yield.
Title: Re: ok which one of you covered their shorts 20 minutes before they expired?
Post by: merlin0113 on January 08, 2015, 12:54:03 am
You know there's no penalty for just letting it expire right?

Although it is probably safe to assume this shorter didn't know there was no penalty, is there not generally a situation where covering your short right before it expires would be beneficial?

For example, let's say people are selling BitUSD (not short selling) under the price feed. Perhaps you would need to cover at a loss and for that reason you have avoided covering your short in the hope that the price will go up. But there is only 20 minutes left before your short expires so you no longer have any hope of that occurring. Wouldn't you prefer to make several bids for BitUSD at each unique price that it is being offered at, and then use that BitUSD to manually cover your short, rather than letting the market do it for you at the price feed? I guess that depends on how the auto-covering is implemented. Is it a limit order or is it a WYAIWYG order? If it's the latter you will end up paying more BTS of your collateral than necessary in the autocover, where the excess would go towards paying the overlap that gets distributed to BitUSD holders as yield.

Thanks for this post, now I know better about the expire rules.
Title: Re: ok which one of you covered their shorts 20 minutes before they expired?
Post by: jshow5555 on January 08, 2015, 12:57:26 am
Well, I for one believe he did the right thing for himself.

As in he shorted most of his position yet again. Has he been waiting for those shorts to expire, me and a ton of you it seems, would have sold him enough bitUSD to cover but we would have precluded him from re-shorting....
It is king of long term/bigger approach, what she did.
Title: Re: ok which one of you covered their shorts 20 minutes before they expired?
Post by: merlin0113 on January 08, 2015, 01:07:47 am
Well, I for one believe he did the right thing for himself.

As in he shorted most of his position yet again. Has he been waiting for those shorts to expire, me and a ton of you it seems, would have sold him enough bitUSD to cover but we would have precluded him from re-shorting....
It is king of long term/bigger approach, what she did.

yes, and I guess he figured it out over the passed month.
Title: Re: ok which one of you covered their shorts 20 minutes before they expired?
Post by: mf-tzo on January 08, 2015, 01:28:31 pm
I am still very confused about what I need to do in this case when I see that other big short positions are expiring...

I thought that since he will need to cover his position, there would have been a demand for bitusd increasing the bitusd above the peg and that BTS as a result of this would also increase. But that didn't happen.

I had a profitable short position open and I thought I should cover with my bitusd before the big orders expired and re open my short position at a lower interest rate. Since I thought there would be a demand for bitusd, I thought that I would be able to re open my short position. That didn't happen either so I ended up covering my short position without beeing able to re open..

Basically, although I really like the whole BTS forex happening, I am still not clear of what is happening and how to properly trade. I keep making mistakes I think. It will be nice if there is a more advanced trading tutorial teaching us the mechanics with examples and what we should expect when we see that and that and that etc in order to make more correct trading decisions.. for example when you see that ... on the graph it means that...
when you see the peg is below and shorts are about to expire this means that...
etc etc..

Title: Re: ok which one of you covered their shorts 20 minutes before they expired?
Post by: vlight on January 08, 2015, 01:55:56 pm
You have to buy BitUSD cheaply and then sell it just below the price feed. The hardest thing is to know when exactly to do it. If you do it too early, you risk that BitUSD price will go against you. Your short order did not get filled because possibly the same person shorted against himself by using higher interest rate. In order to short, he had to buy all sell orders up to the price feed. This is where your BitUSD sell orders should have been.
Title: Re: ok which one of you covered their shorts 20 minutes before they expired?
Post by: vlight on January 08, 2015, 02:05:00 pm
You know there's no penalty for just letting it expire right?

Or is there?

1) We assume a trusted price feed exists
2) We assume an asset with no counter party and sufficient market liquidity at a market established price (Bitcoin, BTS)
3) Two parties enter a "contract for difference" on the price feed, the short-side puts up 2x and the long side puts up 1x for a total of 3x held as collateral for issuance of BitUSD
4) The short may cover (burn BitUSD) at any time to gain access to the 3x collateral.
5) The short is forced to cover after 30 days by accepting any and all orders at or above the price feed.
6) The short is forced to cover if the price feed results in the value of collateral being equal to 2x or less the value of the BitUSD.
7) Shorts can only execute at the price feed (no selling BitUSD to 0)
8) Margin calls only happen at the price feed (no manipulating the internal market to cause a short squeeze)
9) Shorts are matched prioritized by interest rate they are willing to pay.

If the expiring short is large enough, will it not force to buy above the price feed?
Title: Re: ok which one of you covered their shorts 20 minutes before they expired?
Post by: toast on January 08, 2015, 03:29:53 pm
I actually think thats nit the case atm, but wven if it were, hiw is that a penalty? You'd have to buy whatever bitusd is there anyway

Sent from my SCH-I535 using Tapatalk

Title: Re: ok which one of you covered their shorts 20 minutes before they expired?
Post by: Agent86 on January 08, 2015, 03:40:54 pm
You know there's no penalty for just letting it expire right?

Or is there?

1) We assume a trusted price feed exists
2) We assume an asset with no counter party and sufficient market liquidity at a market established price (Bitcoin, BTS)
3) Two parties enter a "contract for difference" on the price feed, the short-side puts up 2x and the long side puts up 1x for a total of 3x held as collateral for issuance of BitUSD
4) The short may cover (burn BitUSD) at any time to gain access to the 3x collateral.
5) The short is forced to cover after 30 days by accepting any and all orders at or above the price feed.
6) The short is forced to cover if the price feed results in the value of collateral being equal to 2x or less the value of the BitUSD.
7) Shorts can only execute at the price feed (no selling BitUSD to 0)
8) Margin calls only happen at the price feed (no manipulating the internal market to cause a short squeeze)
9) Shorts are matched prioritized by interest rate they are willing to pay.

If the expiring short is large enough, will it not force to buy above the price feed?

When Dan says "above the price feed"  I think he means below the price feed (He views the market inverse of most people).  As far as I know, right now expiring shorts just form a buy wall at the feed.  Regardless, I think it will be changed so that shorts really can be forced to cover above the price feed which I think is better.
Title: Re: ok which one of you covered their shorts 20 minutes before they expired?
Post by: vlight on January 08, 2015, 03:56:27 pm
I actually think thats nit the case atm, but wven if it were, hiw is that a penalty? You'd have to buy whatever bitusd is there anyway

Sent from my SCH-I535 using Tapatalk

Ok, if it were the case you could short against yourself, you don't have to buy above the price feed for a premium price. You may end up with some BitUSD that you will have to sell to the market, but if you split everything to small enough orders, the market will be able to absorb the remaining BitUSD.

When Dan says "above the price feed"  I think he means below the price feed (He views the market inverse of most people).  As far as I know, right now expiring shorts just form a buy wall at the feed.  Regardless, I think it will be changed so that shorts really can be forced to cover above the price feed which I think is better.

Haha, this now gets even more confusing. Up until that BM post, i thought the same.

My current understanding is that 'buy wall at the feed' exists only when there are no sell orders. If there are sell orders it will buy any sell order even for a very high price. I do not think that this is better at all. :D
Title: Re: ok which one of you covered their shorts 20 minutes before they expired?
Post by: mf-tzo on January 08, 2015, 07:55:17 pm
These things need some more clarification I think...

As far as I understand so far, when a short order expires and is not manually covered, the system will let it ride and will be covered slowly at the feed price. There is no penalty and the short order will not be covered by buying all the bitusd orders available. I think this wouldn't make any sense and the market would be manipulated if the short positions were covered at whatever open sell orders and not the feed price.

Regarding those short orders: I understand, (or at least I understand so I would like more clarification please), that that person calculated how many bitusd he bought by selling BTS to himself and was able to rollover his short position with an interest rate 6%.
What I don't understand is what would have happened if he hadn't rollover his position and let it ride. There were no many sell order for bitusd's at the feed price to cover his short position and I don't understand what the system would have done since the short position would need to be covered at feed price.

Would the system show if he hadn't rollover that these short positions have expired and are open? What would be the effect on the peg in this scenario? I would assume that at least for a short period until these positions are covered a lot of people would sell bitusd above the peg (since they know that this guy needs to cover) and this would drive BTS price down? I am so confused...lol..

Title: Re: ok which one of you covered their shorts 20 minutes before they expired?
Post by: toast on January 08, 2015, 08:20:37 pm
These things need some more clarification I think...

As far as I understand so far, when a short order expires and is not manually covered, the system will let it ride and will be covered slowly at the feed price. There is no penalty and the short order will not be covered by buying all the bitusd orders available. I think this wouldn't make any sense and the market would be manipulated if the short positions were covered at whatever open sell orders and not the feed price.

Regarding those short orders: I understand, (or at least I understand so I would like more clarification please), that that person calculated how many bitusd he bought by selling BTS to himself and was able to rollover his short position with an interest rate 6%.
What I don't understand is what would have happened if he hadn't rollover his position and let it ride. There were no many sell order for bitusd's at the feed price to cover his short position and I don't understand what the system would have done since the short position would need to be covered at feed price.

Would the system show if he hadn't rollover that these short positions have expired and are open? What would be the effect on the peg in this scenario? I would assume that at least for a short period until these positions are covered a lot of people would sell bitusd above the peg (since they know that this guy needs to cover) and this would drive BTS price down? I am so confused...lol..

There would be a massive buy wall just like there is a massive short wall normally. It would either be completely matched by the short wall or it would eat through it and then the buy wall would ride the feed and anyone could sell into it at $1.
Title: Re: ok which one of you covered their shorts 20 minutes before they expired?
Post by: arhag on January 08, 2015, 09:26:38 pm
There would be a massive buy wall just like there is a massive short wall normally. It would either be completely matched by the short wall or it would eat through it and then the buy wall would ride the feed and anyone could sell into it at $1.

Can you confirm if any BitUSD sells below the price feed in that situation would be eaten up in the typical Bitshares way (with overlap fees going to the network) or the way done with market/limit orders in typical exchanges?
Title: Re: ok which one of you covered their shorts 20 minutes before they expired?
Post by: mf-tzo on January 08, 2015, 09:40:27 pm
Quote
There would be a massive buy wall just like there is a massive short wall normally. It would either be completely matched by the short wall or it would eat through it and then the buy wall would ride the feed and anyone could sell into it at $1.


Sorry Toast it is still not clear to me what you mean...

There would be a massive buy wall for bitusd in order to cover the expired short position.
This wall would have eaten all the open short positions.
I am not sure I understand the last point "the buy wall would ride the feed and anyone could sell into it at $1". Do you mean that the system would cover the remaining short position by buying all the open sell BTS orders even the ones for i.e. selling BTS for $1?. I doubt that you mean that because if that is the case then someone who has a lot BTS and a lot bitusd could easily manipulate the market with a few bitusds and sell his remaining BTS holdings for $1 isn't it?
Title: Re: ok which one of you covered their shorts 20 minutes before they expired?
Post by: toast on January 08, 2015, 10:05:19 pm
I am not sure I understand the last point "the buy wall would ride the feed and anyone could sell into it at $1". Do you mean that the system would cover the remaining short position by buying all the open sell BTS orders even the ones for i.e. selling BTS for $1?. I doubt that you mean that because if that is the case then someone who has a lot BTS and a lot bitusd could easily manipulate the market with a few bitusds and sell his remaining BTS holdings for $1 isn't it?

Why would the system be buying BTS? It's buying bitUSD to cover the shorts.

edit:  My preferred market orientation is "normal" meaning a short is a type of ask and a margin call is a bid
Title: Re: ok which one of you covered their shorts 20 minutes before they expired?
Post by: mf-tzo on January 08, 2015, 10:32:19 pm
I didn't say the system to buy BTS. I said "by buying all the open sell BTS orders".

with specific example so I can understand:

A short order for $100k bit usd is about to expire and we decide not to cover in advance.
There are at the feed price sell bitusd $50k (which are bought automatically)
There are $20k open short position not auctioned (which are now auctioned automatically)
There are $30k buy bitusd @ $1 per BTS (are these bought as well and the expired cover position is closed?)
Title: Re: ok which one of you covered their shorts 20 minutes before they expired?
Post by: toast on January 08, 2015, 10:53:03 pm
I didn't say the system to buy BTS. I said "by buying all the open sell BTS orders".

with specific example so I can understand:

A short order for $100k bit usd is about to expire and we decide not to cover in advance.
There are at the feed price sell bitusd $50k (which are bought automatically)
There are $20k open short position not auctioned (which are now auctioned automatically)
There are $30k buy bitusd @ $1 per BTS (are these bought as well and the expired cover position is closed?)

I obviously did not mean $1 per BTS, that would be some bizzare price fixing. It is $1 per bitUSD. And again the last group is BUY BITUSD orders which are SELL BTS orders, so why would the market engine BUY BTS if it needs bitUSD?

Maybe what you meant was:
* Margin for $100k expires
* At or below feed price there are sell bitUSD $50k. These are bought up.
* $20k unfilled short bitUSD orders are also bought up.
* $30k sell bitUSD at slightly above $1 per bitUSD. These are not bought up, instead there is a $30k buy wall from the market engine at the feed price.

(the discussion in question is whether to allow the market engine to buy up bitUSD even at more than $1 per bitUSD, meaning those last $30k would get bought, since its better to cover now and sqeeze some shorts than to risk waiting and having the market move too far)
Title: Re: ok which one of you covered their shorts 20 minutes before they expired?
Post by: mf-tzo on January 08, 2015, 11:47:24 pm
Great! I understood. I have indeed messed up my thinking. Thank you very much for the clarifications!!